Newspaper article The Evening Standard (London, England)

Private Investors' Hurt Will Be a Long Time Healing

Newspaper article The Evening Standard (London, England)

Private Investors' Hurt Will Be a Long Time Healing

Article excerpt


EACH day, it seems, over lunch or at dinner parties in golf clubs, one meets people who thought they had made ample pension provision but are now finding, as they reach their intended retirement date, that they cannot afford to stop working.

The value of their private pension fund has plummeted by half in the past three or so years. Lower interest rates and greater life expectancy have pulled the rug from under the annuities market. At today's low rates, the capital they do have will buy much less income.

Typically, the combined effect of lower stock markets and devalued annuities is that they have to contemplate retirement on an income that is perhaps a third of what they expected. Not surprisingly, they are deferring retirement as long as possible. They are also in many cases seething with resentment at the City.

These are the people really bitten by the stock market turmoil. They did not create the stock market binge, they may not even have benefited from it very much. But they are the victims of its consequences.

When retirement is a decade or more away, stock market plunges can be ignored. When it is imminent, share prices take centre stage.

Everyone accepts the principle that share prices can go down as well as up.

But the bitterness comes in because many believe the savagery of the current bear market goes beyond what might reasonably have been expected, and owes much to the need to purge the system of excesses that were little to do with investors.

Rightly or wrongly, they believe these were fuelled rather than moderated by the so-called investment professionals of the financial sector, who also benefited mightily from them. They feel very let down by them. They feel their advisers should have protected them more.

Most of this is lost on investment bankers and fund managers, few of whom find a need to express contrition for chasing up stocks a few years ago. …

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